Fortune in Facsimile

At a time when most of the glamour stocks have lost their charm, a company with the distinctive name of Xerox still holds on to its appeal. Xerox owes all of its astonishing market success to a complicated, desk-sized machine prosaically called the 914 Office Copier. There is nothing prosaic about what the 914 does: without muss, fuss, delay or extensive training of an operator, it makes copies on ordinary paper of almost anything that will fit on its Qin. by 14-in. plate -- including a child's doll. Last week, thanks to the 914. Xerox stock closed at $176 a share, roughly 49 times the company's $3.60 share earnings in 1962.

Name Changes. The 914 is the result of a long-range, $40 million gamble by scholarly Xerox President Joseph Wilson, 53. When Xerox (then called the Haloid Co.) came out of World War II, it was a producer of photographic and photocopy papers and machines with annual sales of $6,750,000 and an uninspiring future. Wilson decided to create a new future by betting all on a new process called xerography (derived from Greek and meaning dry writing), which showed promise of reproducing papers and documents without the standard need for chemical developing. He bought some of the rights to xerography from Battelle Memorial Institute, a nonprofit industrial research organization that had helped its inventor. New York Patent Attorney Chester Carlson, develop the process.

After years of work in the lab to improve the process, the company finally began to market a crude copying machine in 1950, but sales were disappointing. Changing its name to Haloid Xerox Inc., the company kept working on improvements and in 1960 introduced the 914. It was an immediate hit, and Xerox's sales began a spectacular climb, rising from $31.7 million in 1959 to $104.5 million last year. Earnings rose from $2,100,000 to $13.9 million. "In 1963," says Wilson, "we believe that over 2.3 billion pictures will be made on the 914, and each picture brings Xerox an income of about 5-c-."

When the 914 came out, there was already a host of smaller office copiers for sale. Evanston's American Photocopy Equipment Co. and Eastman Kodak Co. with its Verifax dominated the "wet copying'' field, which uses chemical developers; Minnesota Mining & Manufacturing Co. had its fast-selling Thermo-Fax, a dry method that uses heat from an infra-red lamp to form an image on specially coated papers. But the Xerox machine had a special appeal. It is a dry method that needs no chemicals, can duplicate anything from grease pencil to ballpoint pen, though it is more successful in copying type than photographs. The 914 makes copies by projecting the image of the original document or object onto an electrostatically charged drum coated with a sensitive element called metallic selenium. The machine automatically sprinkles the drum with a black powder that adheres to the dark portions of the image; the drum then rolls the powder onto the paper, which is also electrostatically charged. A quick blast of heat fixes the powder permanently to the paper.

Respectful Distance. Xerox's profits are big because it costs the company only $2.500 to make each 914. which rents for an average $5.000 a year (rates: $95 monthly and 3.5-c- for every copy over 2,000). American Photocopy, SCM Corp., and Charles Bruning Co. now sell rival electrostatic copiers, but they require special papers. Xerox (which dropped the Haloid from its name in 1961) will come out with a smaller, desktop 813 dry copier next fall (probable rent: $40 a month), is developing a machine to apply xerography to facsimile transmission of documents by radio waves. Though Wilson expects the demand for the 914 to begin to slacken after mid-1963. he counts on the company's 550 patents and 375 pending patents to keep competition at a respectful distance.

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